SunRocket Turned down Acquisition Offers, Nuvio CEO Says
SunRocket turned down acquisition offers from VoIP company Nuvio and a “couple other firms” in the weeks before it shut down Monday, Nuvio CEO Jason Talley said in an interview. SunRocket instead brought in Sherwood consulting to help wind up the business. “SunRocket investors and the board were looking to move on,” he said. Sherwood spokesman Martin Pichinson did not comment.
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SunRocket’s problem was a poor business model that spent more money on acquiring customers than it got in return, Talley said. The company had more than 200,000 customers and was second in size only to Vonage among independent VoIP providers, but it bled money because it spent about $300 in acquisition costs per customer for a $200 per year service, he said. In contrast, Nuvio spends most marketing dollars on business customers, which pay enough to justify the expense, he said. Nuvio is marketing to SunRocket customers now only because it does not cost much win them, he said.
Universal Service Fund regulation and market uncertainty from Vonage litigation could have led to SunRocket’s demise, former SunRocket media relations director Brian Lustig told us Tuesday (CD July 18 p15). But that explanation is a “disservice to the voice industry,” Talley said. Successful businesses are prepared for problems like patent litigation, and blaming FCC regulation is “unfair to the FCC,” he said, admitting discomfort in defending regulators. There will be more VoIP failures, he said. But it will again come down to the business models, not outside causes, he said.
Meanwhile, Sherwood picked 8x8 to offer SunRocket subscribers a deal to switch to its Packet8 VoIP service, 8x8 said Wednesday. Packet8 will waive all regular start-up costs and offer a free month of service, it said. SunRocket will inform customers of the offer through an e-mail and voicemail campaign, it said.